GB: Halifax HPI

Tue May 08 02:30:00 CDT 2018

Consensus Actual Previous Revised
M/M % change -0.3% -3.1% 1.5% 1.6%
Yr/Yr % change- 3 mo moving av 3.3% 2.2% 2.7%

House prices were very weak in April according to the new Halifax survey. A 3.1 percent monthly fall in the lender's house price index (HPI) was much steeper than expected and easily more than reversed March's upwardly revised 1.6 percent increase. Annual growth over the latest three months was 2.2 percent, down from 2.7 percent in the first quarter and less than half the 4.5 percent peak rate seen in August-October 2017.

The quarterly change in prices held steady at minus 0.1 percent which suggests a broadly flat underlying trend. However, with mortgage approvals and home sales falling in March and the Halifax's own Housing Market Confidence Tracker at a 5-year low, weak demand could yet see prices decline more significantly over coming months. Still, supply remains very tight with the stock of homes available for sale close to record lows. Moreover, the threat of higher mortgage rates has eased, at least for now, with the sluggishness of recent economic data seemingly ruling out the hike in BoE Bank Rate on Thursday that seemed almost a done deal just a few weeks ago.

Against this backdrop, a broadly flat outlook for prices in 2018 remains the most probable scenario, albeit with some downside risk courtesy of the dark cloud of Brexit uncertainty that continues to loom overhead.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and methodology remain unchanged.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.